Ted Grant

Wilson drifts towards disaster - emergency action needed

The Labour government, in its first weeks
of power, has been confronted by the crisis caused by the long-term decline of
British capitalism.

Labour must take immediate and sweeping
action to tackle the crisis with socialist planning before the situation grows
worse and cripples and even defeats the government.

The Tories left the economy with a balance
of payments [deficit] of £800 million. This called for drastic measures, either
in the interests of capitalism or against it.

It is impossible to take half-way measures
with a system so malignant as the British economy.

Events have demonstrated that there cannot
be a middle way. Hardly had the echoes of the speech of the Chancellor, James
Callaghan, to the bankers in the City of London
died down before the crisis forced the government to raise the bank rate to 7
per cent. Callaghan has followed in the footsteps of Selwyn Lloyd.

The Chancellor and Wilson have promised to
work hand-in-hand with the employers and big business. Callaghan, in his speech
in the City, said, “Let me make it quite clear that we recognise your contributions to the national economy, and we
recognise that you need to earn your living; it is not our job to make it more
difficult for you to do so.”

The only “contribution” the gentlemen of
the City make is to live in great luxury on the wealth produced by the workers.

The Financial
Times of November 28th commented, “The government, after the crises, has in
fact completely altered its economic strategy. The priorities are now the
defence of sterling, the boosting of exports, the review of overseas defence
expenditure and the release for export industries of skilled men from prestige
projects.

“It is hoped to avoid further deflation, but growth, and the 4 per cent, have been
abandoned for the time being.”

Having forced the Labour government to take
the “traditional” measures, measures in the interests of capitalism, the City
is preparing to demand further retreats. The Financial Times, the writer continues, “If the Europeans (OECD)
press hard, however, the government may be forced to choose between postponing
many of the measures on which it was elected to office and squeezing the
economy hard, and going to the country for a fresh mandate... There is
certainly a strong case for cutting public expenditure in some way, since the 4
year programme drawn up by the Conservative government was based on the
assumption that the economy would grow at a rate of 4 per cent; since the
assumption is no longer tenable, the programme ought to be revised.”

Even the poor measures foreshadowed by the
Conservatives are far too radical for these financiers, let alone the modest
measures of reform suggested by Labour’s election programme.

It is a sorry state of affairs when one of
the richest countries in the world, with accumulated resources worth more than
£100,000 million, is reduced to the paralysis of “stop-go” which Wilson and
company so sternly condemned before the election.

The answer of the labour movement must be
that if capitalism cannot afford even these reforms, they can’t afford
capitalism. If emergency measures are necessary let it be emergency measures
against those who can afford it and are responsible for the mess.

There are already hints that steel
nationalisation is now too controversial and must be dropped in the present
climate of economic crisis. But it is not state
measures the city gents are against, only state measures that even remotely
threaten the existence of the capitalist system.

Under the Tories, major concerns, like the
aircraft industry, were subsidised lavishly to the extent of £300 million. The
state provided the money, ran the risks, paid for the losses, while the
capitalist “free unenterprisers” pocketed whatever profits were going.

Capitalist industry is becoming so
parasitic that the capitalists have lost their former “pride”; they are eager
to put out the begging bowl and ask greedily for “national assistance,” not the
beggarly pittance of a few pounds given to workers and old age pensioners “down
on their luck” but hundreds of millions of pounds.

While the capitalist Scrooges are demanding
realistic finance and the cutting of money to be spent on schools and
hospitals, their brothers in industry are demanding subsidies. The Times Review of Industry of December
shows the calculations of big business.

“Unlike previous Labour governments this
administration is more concerned about the efficiency of industry than about
its ownership,” declares the review. “The cost of modernisation nowadays is
often too great for individual firms and as the FBI (Federation of British
Industries) pointed out last year the state must prime the pump of research.”

Even the suggestions of stringent capital
gains taxes have now been repudiated in panic by Callaghan. The corporation tax
and the capital gains tax will be no heavier than those of the American citadel
of capitalism.

Even before the “hundred days” are up,
Labour’s programme of reform is in ruins. The miserable 4 per cent rate of
growth suggested by the Tories will not be reached next year in a capitalist
economy; the Labour government will be lucky if it reaches 2 per cent.

Labour must either introduce drastic
measures against the insurance giants, the big banks and the monopoly concerns
that dominate the British economy, or the Labour leaders will become tools in
their hands.

Yet the British economy is marvellously
rich. All that stands in the way of a real plan of production is the domination
of the market and the interests of the tiny handful of the owners of the means
of production. This is an emergency.

Labour’s stated intention to carry out
their full programme was warmly received by the working class and the
electorate generally.

The increase in old age pensions, in spite
of the fact the workers [pay] through higher national insurance contributions,
was widely welcomed. This reform, however small, heartened the workers, in
spite of the justified criticism that it should have been introduced
immediately or, at the worst, post-dated like the salary increase of the MPs.

The pressure of Labour backbenchers to backdate
the pension increases had to be resisted because of fear of the reaction of
bankers at home and abroad.

Nevertheless Labour has a tremendous fund
of goodwill to draw upon from an electorate nauseated by 13 years of Toryism.
The current opinion polls show growing support for the government.

If Labour proclaims an emergency and draws
up a national plan to introduce sweeping socialist measures, based on control
of the giant industries, the banks and insurance companies, with the
co-operation of technicians, shop stewards, scientists and friendly civil
servants, it will have the broad mass of the population behind it and can
comfortably increase its majority at an early election.

If these steps are not taken, international
finance will cripple the government and bring it tumbling to defeat, to be
replaced by the enemy of progress and the ally of racketeers and slum
landlords, the Tory Party.